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Energy resources in Egypt

Introduct|on
Pydrocarbons play a slzeable role ln LgypL's economy boLh from oll and naLural gas
producLlon and also ln Lerms of revenues from Lhe Suez Canal an lmporLanL LranslL
polnL for oll shlpmenLs ouL of Lhe erslan Culf 1oLal oll producLlon however has
decllned slnce Lhe counLry's 1996 peak of close Lo 933000 barrels per day (bbl/d)
Lo currenL levels of abouL 660000 bbl/d LgypL's consumpLlon ls sllghLly hlgher
Lhan producLlon and Lhe counLry has begun Lo rely on a small volume of lmporLs Lo
meeL domesLlc demand LgypL also has Lhe largesL oll reflnlng secLor ln Afrlca and
slnce reflnlng capaclLy now exceeds domesLlc demand some nonLgypLlan crudes
are currenLly lmporLed for processlng and reexporL


uecreases ln oll producLlon have been offseL by Lhe rapld developmenL of Lhe
naLural gas secLor for boLh domesLlc consumpLlon and exporL Cver Lhe pasL
decade LgypL has become a slgnlflcanL naLural gas producer and a sLraLeglc source
for Luropean naLural gas lmporLs LgypL currenLly has a plpellne neLwork for

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exporLs Lo LasLern MedlLerranean counLrles ln addlLlon Lo llquefled naLural gas
(LnC) exporLs Lo Lurope Asla and Lhe Amerlcas Powever lncreaslng domesLlc
demand for naLural gas has led Lhe governmenL Lo sLall naLural gas exporL
expanslon plans 1he governmenL has been acLlvely worklng Lo aLLracL forelgn
lnvesLmenLs ln Lhe secLor Lo lncrease exploraLlon producLlon and downsLream
acLlvlLles
ln addlLlon Lo oll and gas producLlon LgypL plays an lmporLanL role ln lnLernaLlonal
energy markeLs Lhrough Lhe operaLlon of Lhe Suez Canal and SuezMedlLerranean
(SuMLu) lpellne Lwo rouLes for Lhe exporL of erslan Culf oll and LnC lees
collecLed from operaLlon of Lhese Lwo LranslL polnLs ls a slgnlflcanL source of
revenue for Lhe LgypLlan governmenL
AlmosL all of LgypL's 32 quadrllllon 8rlLlsh Lhermal unlLs (8Lu) of energy
consumpLlon ln 2008 was meL by oll (43 percenL) and naLural gas (49 percenL) Cll's
share of Lhe energy mlx ls mosLly ln Lhe LransporLaLlon secLor buL wlLh Lhe
developmenL of compressed naLural gas (CnC) lnfrasLrucLure and vehlcles Lhe
share of naLural gas ln Lhe LransporLaLlon secLor ls expecLed Lo grow

ln Lerms of elecLrlclLy generaLlon naLural gas accounLs for over 70 percenL of Lhe
LoLal mlx woLh Lhe remalnder belng meL mosLly by hydroelecLrlclLy lans are
underway Lo furLher expand elecLrlclLy generaLlon capaclLy by uLlllzlng Lhe

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counLry's vasL wlnd and solar resources expandlng Lhe Culf CooperaLlon Councll
(CCC) ower Crld and also Lhrough developmenL of nuclear power

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Accordlng Lo Lhe Cll and Cas !ournal's !anuary 2011 esLlmaLe LgypL's proven oll
reserves sLand aL 44 bllllon barrels an lncrease from 2010 reserve esLlmaLes of 37
bllllon barrels ln 2010 LgypL's LoLal oll producLlon averaged 660000 (bbl/d) of
whlch approxlmaLely 340000 bbl/d was crude oll uesplLe new dlscoverles and
enhanced oll recovery (LC8) Lechnlques aL maLure flelds crude oll producLlon
conLlnues lLs decllne AL Lhe same Llme new naLural gas fleld producLlon has led Lo
lncreases ln Lhe producLlon of naLural gas llqulds and lease condensaLes whlch
have offseL some of Lhe decllnes ln LoLal oll llqulds producLlon
Cll consumpLlon ls esLlmaLed Lo be close Lo 710000 bbl/d sllghLly hlgher Lhan
producLlon Cll lmporLs are expecLed Lo conLlnue wlLh some reflned producL
exporLs ln Lhe shorLLerm buL are sLlll conLlngenL on domesLlc demand growLh 1he
counLry dld reglsLer a small volume of neL oll lmporLs ln 2010 1hese lmporLs are ln
parL Lhe resulL of LgypL's reflnlng capaclLy belng larger Lhan oll producLlon levels
(see 8eflnery secLlon below)

uomesLlc demand for peLroleum producLs conLlnues Lo grow 1he governmenL had
been plannlng Lo reduce demand growLh by gradually llfLlng subsldlzed prlces and
LargeLlng subsldles more effecLlvely 1hls ls a pollLlcally senslLlve lssue LhaL wlll be

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dlfflculL Lo fully lmplemenL 1he lncreased use of compressed naLural gas as a fuel
for moLor vehlcles ls one Lrend LhaL may ald governmenL efforLs ln curblng
demand buL naLural gas ls also subsldlzed and lncreaslng consumpLlon ls beglnnlng
Lo affecL naLural gas exporLs
ctor rgan|zat|on
1he LgypLlan Ceneral eLroleum CorporaLlon (LCC) ls Lhe sLaLe enLlLy charged
wlLh managlng upsLream acLlvlLles lncludlng lnfrasLrucLure llcenslng and
producLlon lnLernaLlonal and forelgn naLlonal oll companles play a slgnlflcanL role
ln LgypL's upsLream secLor on a producLlonsharlng basls wlLh LCC 1he energy
secLor ls broken up lnLo Lhree holdlng companles ln addlLlon Lo Lhe LCC and Lhe
LgypLlan Mlneral 8esource AuLhorlLy (LM8A) Lhe LgypLlan naLural Cas Poldlng
Company (LCAS) Lhe LgypLlan eLrochemlcals Poldlng Company (LCPLM) and
Canoub Ll Wadl eLroleum Poldlng Company (CAnCL)
Lxp|orat|on and roduct|on
LgypLlan oll producLlon comes from flve maln areas prlmarlly Lhe Culf of Suez and
Lhe nlle uelLa buL also Lhe WesLern ueserL Lhe LasLern ueserL and Lhe
MedlLerranean Sea MosL LgypLlan producLlon ls derlved from maLure relaLlvely
small flelds LhaL are connecLed Lo larger reglonal producLlon sysLems Cverall
producLlon ls ln decllne parLlcularly from Lhe older flelds ln Lhe Culf of Suez
Powever some decllnes have been offseL by small yeL commerclally vlable
dlscoverles ln all produclng areas
Lxports
AlLhough a neL oll lmporLer LgypL dld reglsLer abouL 143000 bbl/d of crude oll
exporL ln 2010 1he ma[orlLy of Lhese exporLs wenL Lo lndla (30000 bbl/d)
followed by lLaly (29000 bbl/d) and Lhe unlLed SLaLes (16000 bbl/d) 1he
remalnder of LgypL's crude oll exporLs wenL Lo oLher Luropean counLrles and Asla
k|n|ng
LgypL has Lhe largesL reflnlng secLor on Lhe Afrlcan conLlnenL wlLh Len reflnerles
and a comblned crude oll processlng capaclLy of 973000 bbl/d (CC! and AS
8evlew) 1he largesL reflnery ls Lhe 146300bbl/d Llnasr reflnery aL Suez whlch ls

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owned by Lhe LgypLlan governmenL Lhrough Lhe LCC and operaLed by lLs
subsldlary Lhe Ll nasr eLroleum Company 1he governmenL has plans Lo lncrease
producLlon of llghLer producLs peLrochemlcals and hlgher ocLane gasollne by
expandlng and upgradlng exlsLlng faclllLles and promoLlng new pro[ecLs CurrenL
plans call for expanslon of reflnlng capaclLy by over 600000 bbl/d by 2016 and
even furLher expanslons lnLo Lhe nexL decade requlrlng large amounLs of forelgn
lnvesLmenL

Natura| Gas |n Lgypt
ue to major recent discoveries, natural gas is likely to be the primary growth
engine of Egypt 's energy sector for the foreseeable future.
Egypt's natural gas sector is expanding rapidly with production quadrupling between
1998 and 2009. According to the Oil and Gas Journal, Egypt`s estimated proven
gas reserves stand at 77 trillion cubic Ieet (TcI), an increase Irom 2010 estimates oI
58.5 TcI and the third highest in AIrica aIter Nigeria (187 TcI) and Algeria (160
TcI). In 2009, Egypt produced roughly 2.3 TcI and consumed 1.6 TcI. With the
ongoing expansion oI the Arab Gas Pipeline, and LNG Iacilities, Egypt will
continue to be an important supplier oI natural gas to Europe and the Mediterranean
region.

According to Cedigaz, in 2009 the electricity sector accounted Ior the largest share
oI natural gas consumption (54 percent) Iollowed by industrial sector (29 percent).
While still a relatively small share, Egypt is beginning to incorporate natural gas
into the transport sector through the use and development oI compressed natural gas
vehicles and Iueling stations.

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The government is also encouraging households, businesses and the industrial sector
to consider natural gas as a substitute Ior petroleum and coal. In January 2008, the
World Bank approved loans Ior the Natural Gas
Connections Project, which serves to switch consumption oI liqueIied petroleum gas
(LPG) to natural gas through investment in new connections and to Iurther expand
natural gas use in densely populated, low income areas.


Lxp|orat|on and roduct|on

Exploration and production activities in Egypt`s natural gas sector continue to grow.
While there have been marked decreases in the production oI natural gas associated
with oil extraction, new Iinds oI non-associated gas Iields combined with growing
domestic demand and export capacity, are increasing interest in the Egyptian natural
gas sector. Most industry analysts place Egypt`s natural gas production on an
upward trend in the short- and medium-term despite the existing limitations to the
sector`s growth. To promote exploration in the more expensive deepwater oIIshore,
the Egyptian government revised pricing policies by agreeing to pay more Ior
natural gas produced in these areas, assuring continued international interest in
developing these potential resources.
Over 80 percent oI Egypt`s natural gas reserves and 70 percent oI production is in
the Mediterranean and Nile Delta but exploration and production continue in all
major hydrocarbon rich areas including the Western Desert.

Lxports
Egyptian began exporting natural gas in the mid-2000s with the completion oI the
Arab Gas Pipeline (AGP) in 2004 and the startup oI the Iirst three LNG trains at
Damietta in 2005. In 2009, Egypt exported close to 650 billion cubic Ieet (BcI) oI
natural gas, around 70 percent oI which was exported in the Iorm oI LNG and the
remaining 30 percent via pipelines.

|p||n Lxports
Egyptian pipeline exports travel through the Arab Gas Pipeline (AGP) that provides
gas to Lebanon, Jordan and Syria with Iurther additions being planned. The Arish-
Ashkelon pipeline addition, which branches away Irom the AGP in the Sinai
Peninsula and connects to Ashkelon, Israel began operations in 2008. Domestic
pressure over contracts, pricing Ior exports to Israel, and technical problems caused
a Iew interruptions but exports resumed in
2009.

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|qu|d Natura| Gas (NG)
Egypt has three LNG trains: Segas LNG Train 1 in Damietta and Egypt LNG trains
1 and 2 in Idku. The combined LNG export capacity is close to 600 BcI per year
with plans to expand in the near Iuture pending export policy changes and
legislation. In 2009, LNG exports were approximately 450 BcI. The largest recipient
oI Egyptian LNG Ior 2009 was the United States, which imported around 160 BcI,
representing 35 percent oI Egyptian LNG exports Ior the year and also 35 percent oI
U.S. LNG imports. Other major destinations Ior Egyptian LNG include Spain (32
percent) and France (13 percent) with smaller volumes travelling to Canada,
Mexico, Asia and other European countries.

`a`_`U_ on Egyp` n 8

atural Gas (Billion Cubic Feet):
LgypL Afrlca World 8ank
roducLl ,8 , 9,9
ConsumpLlo1483 3616 ,9 19
Net( ExpoitImpoits) 98 36 ,88
Pioveu Reseives
(Tiillion Cubic Feet)
9 9 , 17






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Charts




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L|ctr|c|ty
LgypL s lnsLalled generaLlng capaclLy sLood aL 234 glgawaLLs (CW) as of 2008 wlLh
plans Lo furLher expand capaclLy Lhrough addlLlonal lnvesLmenLs ln naLural gas
nuclear and renewable energy

The Egyptian electriIication rate in 2008 was approximately 99.4 percent, according
to the International Energy Agency (IEA); this rate is among the highest in AIrica
with a 100 percent urban access to electricity and 99.1 in rural areas. Nonetheless,
approximately 500,000 people still lack access to electricity.

According to EIA data, Egypt had an installed generating capacity oI 23.4 gigawatts
(GW) in 2008, 20.3 GW oI which was conventional thermal generation capacity, 2.8
hydroelectric and 0.3 GW oI wind generation capacity. Current peak demand is
estimated to be 21.3 (GW). Ageing inIrastructure and rising demand have led to
intermittent blackouts. The summer oI 2010 highlighted these problems, as the
country experienced rolling nationwide blackouts.

Egyptian electricity consumption is increasing much Iaster than capacity expansions
and the government is planning to invest over $100 billion in the power sector over
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the next decade, while also seeking Iinancing Irom external sources. The private
sector, international organizations, and renewable energy Iunds such as the World
Bank`s Clean Technology Fund have all provided investment in the sector. Under
existing plans, Egypt hopes to produce 20 percent oI its electricity Irom renewable
energy by 2020 while also developing a nuclear power industry.

ctor rgan|zat|on
Egypt`s power sector is organized under the Egyptian Electric Holding Company
which comprises sixteen aIIiliated companies (six production, nine distribution, and
the Egyptian Electricity Transmission Company). Growing electricity demand in the
late 1990s spurred industry restructuring and limited privatization oI the sector. The
country now has several privately-owned power plants which are either independent
power projects (IPPs) or Iinanced under Build, Own, Operate and TransIer (BOOT)
schemes. BOOT projects allow Ior the Iinancing and development oI the large scale
energy projects without aIIecting the country`s debt proIile.


nydro|ctr|c|ty
Egypt has a well developed hydroelectricity sector and, according to the energy
minister, has utilized most oI the Nile River`s hydroelectric potential. In 2008-9,
Egypt generated around 14 Bkwh Irom hydroelectric resources, almost all oI which
came Irom the Aswan High Dam and the Aswan Reservoir Dams.

thr knab|s
With the Nile River hydroelectric resources utilized, plans are underway to Iurther
develop the renewable energy sector. The most recent EIA data indicate that in 2008
wind Iarms accounted Ior only 0.9 Bkwh oI electricity generation, with no
contribution Irom other renewable sources. Government plans to reallocate natural
gas resources Ior export combined with vast solar and wind resources will lead to
Iurther growth in the sector.

$olar

According to the Egyptian Electric Holding Company, other projects such as the
140-MW solar-thermal Kuraymat development should see start-up by 2012. This
project is part oI a general plan to export North AIrican generated electricity to
Europe through the Desertec project. The projects are expected to use concentrated
solar power (CSP) with back up natural gas Iired generators.
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ind

In December, the Egyptian government announced that it was planning to expand
wind capacity by over 2.6 GW over the next Iive years as part oI a plan to increase
wind`s share oI electricity generation to 12 percent. To this end, the government had
said it would be inviting bids in 2011.

uclear

Egypt is also working on developing nuclear power as an energy source.

It has a 22-MW nuclear research reactor at Inshas in the Nile Delta which began
operation in 1997. The Ministry oI Electricity and Energy in 2010 approved a 1,200
MW power station at al-Dab`a which is open to international participation and
expected to become operational by 2019 as the country`s Iirst nuclear power plant.
Bidding Ior the development oI this plant was supposed to have started in early
2011. Three additional plants are planned by 2025.

nternational Connections

Work has been completed on the interconnection oI Egypt's electric transmission
grid with other countries in the region. The Iive-country interconnection oI Egypt's
system with those oI Jordan, Syria, and Turkey was completed by 2002, and Egypt
also activated a link to Libya's electric grid in December 1999.
















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